8-K
Rci Hospitality Holdings, Inc. (RICK)
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United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 9, 2024
RCI HOSPITALITY HOLDINGS, INC.
(Exact Name of Registrant as Specified in Its Charter)
| Texas | 001-13992 | 76-0458229 |
|---|---|---|
| (State or Other Jurisdiction<br><br>of Incorporation) | (Commission<br><br>File Number) | (IRS Employer<br><br>Identification No.) |
10737 Cutten Road
Houston, Texas 77066
(Address of Principal Executive Offices, Including Zip Code)
(281) 397-6730
(Issuer’s Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12) |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b)) |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common stock, $0.01 par value | RICK | The Nasdaq Global Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On May 9, 2024, we issued a press release announcing results for the fiscal quarter ended March 31, 2024, and the filing of our quarterly report on Form 10-Q for that quarter. Also on May 9, 2024, we will hold a conference call to discuss these results and related matters. A copy of the press release is furnished as Exhibit 99.1 to this current report on Form 8-K.
This information shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
| Exhibit Number | Description |
|---|---|
| 99.1 | Press release of RCI Hospitality Holdings, Inc. datedMay 9, 2024 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| RCI HOSPITALITY HOLDINGS, INC. | ||
|---|---|---|
| Date: May 9, 2024 | By: | /s/ Eric Langan |
| Eric Langan | ||
| President and Chief Executive Officer |
3
Document
RCI Reports 2Q24 Results; X Spaces Call at 4:30 PM ET Today; Meet Management at 7 PM ET Tonight
HOUSTON—May 9, 2024—RCI Hospitality Holdings, Inc. (Nasdaq: RICK) today reported results for the fiscal 2024 second quarter ended March 31, 2024. The company also filed its Form 10-Q today.
| Summary Financials (in millions except EPS) | 2Q24 | 2Q23 | 6M24 | 6M23 |
|---|---|---|---|---|
| Total revenues | $72.3 | $71.5 | $146.2 | $141.5 |
| EPS | $0.08 | $0.83 | $0.85 | $1.94 |
| Non-GAAP EPS1 | $0.90 | $1.30 | $1.76 | $2.50 |
| Other charges, net | $8.2 | $3.8 | $8.2 | $3.1 |
| Net cash from operating activities | $10.8 | $16.8 | $24.5 | $31.7 |
| Free cash flow1 | $8.8 | $14.8 | $21.5 | $27.8 |
| Net income attributable to RCIHH common stockholders | $0.8 | $7.7 | $8.0 | $18.0 |
| Adjusted EBITDA1 | $17.2 | $21.7 | $34.7 | $42.1 |
| Weighted average shares used in computing EPS – basic and diluted | 9.35 | 9.27 | 9.36 | 9.25 |
1 See “Non-GAAP Financial Measures” below
Eric Langan, President and CEO, said:
“Despite this uncertain economy, the core strength of our business enabled RCI to generate $72.3 million in revenue in 2Q24 compared to $71.5 million last year. While GAAP EPS of $0.08 primarily reflected $8.0 million in non-cash impairment, non-GAAP EPS totaled $0.90, near the high end of expectations.”
“The Nightclubs segment generated $59.4 million in revenue in 2Q24 compared to $57.0 million last year. Separately, the effort begun mid-February to improve the Bombshells segment resulted in steady sales and better margins on a sequential quarter basis. In addition, we continued to make progress developing new locations and upgrading existing ones to further grow RCI.”
“We’re committed to following our capital allocation strategy, concentrating on our core nightclubs business, evaluating potential acquisitions, and buying back stock. Subsequent to the end of the quarter, we increased our cash position $20 million by closing on our planned bank loan.”
Conference Call at 4:30 PM ET Today
•X Space: https://x.com/ricksceo/status/1787271843239338182 (X log in required)
•Use mobile phone to participate in X Space Q&A
•Phone: Toll Free 877-545-0320, International 973-528-0002, Passcode: 200202 (listen only)
•Presentation: https://www.rcihospitality.com/investor-relations/
•Webcast: https://www.webcaster4.com/Webcast/Page/2209/50516 (listen only)
Meet Management at 7:00 PM ET Tonight
•Investors are invited to meet management at one of RCI’s top revenue generating clubs
•Rick’s Cabaret New York, 50 W 33rd Street, New York, NY 10001
•RSVP your contact information to gary.fishman@anreder.com by 5 PM today
2Q24 Results (Comparisons are to the year-ago period unless indicated otherwise)
•Nightclubs segment: Revenues were $59.4 million compared to $57.0 million. The $2.4 million increase reflected the benefit of acquisitions not in same-store sales (SSS), which more than offset declines from SSS and clubs reopened, reformatted or closed during or prior to the quarter.2 By revenue type, alcoholic beverages increased 16.9% and food, merchandise and other increased 7.8%, while service declined 8.3%. The differing growth rates primarily reflected a higher alcohol and lower service sales mix from the recently acquired clubs and lower SSS. Impairment totaled $8.0 million compared to $0.7 million, resulting in operating income of $11.0 million (18.6% of revenues) compared to $18.0 million (31.6% of revenues). On a non-GAAP basis, operating income was $19.8 million (33.4% of revenues) compared to $22.4 million (39.3% of revenues). The non-GAAP margin decline primarily reflected lower service revenues, wage inflation, and the Texas patron tax increase, which doubled to $10 per customer.
•Bombshells segment: Revenues were $12.8 million compared to $14.3 million. The $1.5 million decline reflected lower SSS, partially offset by increases from FY23 acquisitions not in SSS and a new location.2 Operating income was $0.7 million (5.5% of revenues) compared to $1.8 million (12.4% of revenues). On a non-GAAP basis, operating income was $0.8 million (5.9% of revenues) compared to $2.2 million (15.4% of revenues). The decline in profitability primarily reflected lower SSS.
•Corporate segment: Expenses totaled $6.8 million (9.4% of total revenues) compared to $6.2 million (8.6% of total revenues). On a non-GAAP basis, expenses totaled $6.3 million (8.8% of total revenues) compared to $5.5 million (7.7% of total revenues). The expense increase primarily reflected more corporate level management, accounting and professional services due to recently acquired clubs and new projects.
•Interest expense was 5.5% of revenues compared to 5.1%. The increase reflected higher rate debt from seller-financed promissory notes related to FY23 acquisitions.
•Effective tax rate was 0.7% compared to 21.8%.
•Weighted average shares outstanding increased 0.9% year over year due to shares used in the 2Q23 Baby Dolls-Chicas Locas acquisition, partially offset by subsequent share buybacks.
•Share repurchases totaled 27,265 shares for $1.5 million or an average of $56.12 per share, bringing the 6M24 total to 65,219 repurchased shares for $3.6 million or an average of $55.23 per share. There was $13.0 million in remaining repurchase authorization at March 31, 2024.
•Debt was $231.9 million at March 31, 2024 compared to $234.1 million at December 31, 2023. The reduction reflected scheduled paydowns.
2 See our April 9, 2024, news release on 2Q24 sales for more details
Non-GAAP Financial Measures
In addition to our financial information presented in accordance with GAAP, management uses certain non-GAAP financial measures, within the meaning of the SEC Regulation G, to clarify and enhance understanding of past performance and prospects for the future. Generally, a non-GAAP financial measure is a numerical measure of a company’s operating performance, financial position or cash flows that excludes or includes amounts that are included in or excluded from the most directly comparable measure calculated and presented in accordance with GAAP. We monitor non-GAAP financial measures because it describes the operating performance of the Company and helps management and investors gauge our ability to generate cash flow, excluding (or including) some items that management believes are not representative of the ongoing business operations of the Company, but are included in (or excluded from) the most directly comparable measures calculated and presented in accordance with GAAP. Relative to each of the non-GAAP financial measures, we further set forth our rationale as follows:
•Non-GAAP Operating Income and Non-GAAP Operating Margin. We calculate non-GAAP operating income and non-GAAP operating margin by excluding the following items from income from operations and operating margin: (a) amortization of intangibles, (b) impairment of assets, (c) settlement of lawsuits, (d) gains or losses on sale of businesses and assets, (e) gains or losses on insurance, and (f) stock-based compensation. We believe that excluding these items assists investors in evaluating period-over-period changes in our operating income and operating margin without the impact of items that are not a result of our day-to-day business and operations.
•Non-GAAP Net Income and Non-GAAP Net Income per Diluted Share. We calculate non-GAAP net income and non-GAAP net income per diluted share by excluding or including certain items to net income attributable to RCIHH common stockholders and diluted earnings per share. Adjustment items are: (a) amortization of intangibles, (b) impairment of assets, (c) settlement of lawsuits, (d) gains or losses on sale of businesses and assets, (e) gains or
losses on insurance, (f) stock-based compensation, and (g) the income tax effect of the above-described adjustments. Included in the income tax effect of the above adjustments is the net effect of the non-GAAP provision for income taxes, calculated at 18.4% and 22.3% effective tax rate of the pre-tax non-GAAP income before taxes for the six months ended March 31, 2024 and 2023, respectively, and the GAAP income tax expense (benefit). We believe that excluding and including such items help management and investors better understand our operating activities.
•Adjusted EBITDA. We calculate adjusted EBITDA by excluding the following items from net income attributable to RCIHH common stockholders: (a) depreciation and amortization, (b) impairment of assets, (c) income tax expense (benefit), (d) net interest expense, (e) settlement of lawsuits, (f) gains or losses on sale of businesses and assets, (g) gains or losses on insurance, and (h) stock-based compensation. We believe that adjusting for such items helps management and investors better understand our operating activities. Adjusted EBITDA provides a core operational performance measurement that compares results without the need to adjust for federal, state and local taxes which have considerable variation between domestic jurisdictions. The results are, therefore, without consideration of financing alternatives of capital employed. We use adjusted EBITDA as one guideline to assess our unleveraged performance return on our investments. Adjusted EBITDA is also the target benchmark for our acquisitions of nightclubs.
•We also use certain non-GAAP cash flow measures such as free cash flow. Free cash flow is derived from net cash provided by operating activities less maintenance capital expenditures. We use free cash flow as the baseline for the implementation of our capital allocation strategy.
About RCI Hospitality Holdings, Inc. (Nasdaq: RICK) (X: @RCIHHinc)
With more than 60 locations, RCI Hospitality Holdings, Inc., through its subsidiaries, is the country’s leading company in adult nightclubs and sports bars-restaurants. See all our brands at www.rcihospitality.com.
Forward-Looking Statements
This press release may contain forward-looking statements that involve a number of risks and uncertainties that could cause the company's actual results to differ materially from those indicated, including, but not limited to, the risks and uncertainties associated with (i) operating and managing an adult entertainment or restaurant business, (ii) the business climates in cities where it operates, (iii) the success or lack thereof in launching and building the company's businesses, (iv) cyber security, (v) conditions relevant to real estate transactions, (vi) the impact of the COVID-19 pandemic, and (vii) numerous other factors such as laws governing the operation of adult entertainment or restaurant businesses, competition and dependence on key personnel. For more detailed discussion of such factors and certain risks and uncertainties, see RCI's annual report on Form 10-K for the year ended September 30, 2023, as well as its other filings with the U.S. Securities and Exchange Commission. The company has no obligation to update or revise the forward-looking statements to reflect the occurrence of future events or circumstances.
Media & Investor Contacts
Gary Fishman and Steven Anreder at 212-532-3232 or gary.fishman@anreder.com and steven.anreder@anreder.com
| RCI HOSPITALITY HOLDINGS, INC. | |||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||||||||||||||
| (in thousands, except per share, number of shares and percentage data) | |||||||||||||||||||||||||||||
| For the Three Months Ended | For the Six Months Ended | ||||||||||||||||||||||||||||
| March 31, 2024 | March 31, 2023 | March 31, 2024 | March 31, 2023 | ||||||||||||||||||||||||||
| Amount | % of Revenue | Amount | % of Revenue | Amount | % of Revenue | Amount | % of Revenue | ||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||
| Sales of alcoholic beverages | $ | 32,907 | 45.5 | % | $ | 30,136 | 42.1 | % | $ | 66,223 | 45.3 | % | $ | 59,786 | 42.3 | % | |||||||||||||
| Sales of food and merchandise | 11,068 | 15.3 | % | 11,005 | 15.4 | % | 21,870 | 15.0 | % | 21,352 | 15.1 | % | |||||||||||||||||
| Service revenues | 23,564 | 32.6 | % | 25,690 | 35.9 | % | 48,683 | 33.3 | % | 51,253 | 36.2 | % | |||||||||||||||||
| Other | 4,744 | 6.6 | % | 4,686 | 6.6 | % | 9,414 | 6.4 | % | 9,094 | 6.4 | % | |||||||||||||||||
| Total revenues | 72,283 | 100.0 | % | 71,517 | 100.0 | % | 146,190 | 100.0 | % | 141,485 | 100.0 | % | |||||||||||||||||
| Operating expenses | |||||||||||||||||||||||||||||
| Cost of goods sold | |||||||||||||||||||||||||||||
| Alcoholic beverages sold | 5,891 | 17.9 | % | 5,365 | 17.8 | % | 12,172 | 18.4 | % | 10,739 | 18.0 | % | |||||||||||||||||
| Food and merchandise sold | 3,993 | 36.1 | % | 3,737 | 34.0 | % | 8,031 | 36.7 | % | 7,323 | 34.3 | % | |||||||||||||||||
| Service and other | 35 | 0.1 | % | 16 | 0.1 | % | 75 | 0.1 | % | 65 | 0.1 | % | |||||||||||||||||
| Total cost of goods sold (exclusive of items shown below) | 9,919 | 13.7 | % | 9,118 | 12.7 | % | 20,278 | 13.9 | % | 18,127 | 12.8 | % | |||||||||||||||||
| Salaries and wages | 20,975 | 29.0 | % | 19,428 | 27.2 | % | 42,307 | 28.9 | % | 38,104 | 26.9 | % | |||||||||||||||||
| Selling, general and administrative | 24,653 | 34.1 | % | 22,026 | 30.8 | % | 49,854 | 34.1 | % | 44,758 | 31.6 | % | |||||||||||||||||
| Depreciation and amortization | 3,884 | 5.4 | % | 3,760 | 5.3 | % | 7,737 | 5.3 | % | 7,067 | 5.0 | % | |||||||||||||||||
| Other charges, net | 8,195 | 11.3 | % | 3,758 | 5.3 | % | 8,192 | 5.6 | % | 3,104 | 2.2 | % | |||||||||||||||||
| Total operating expenses | 67,626 | 93.6 | % | 58,090 | 81.2 | % | 128,368 | 87.8 | % | 111,160 | 78.6 | % | |||||||||||||||||
| Income from operations | 4,657 | 6.4 | % | 13,427 | 18.8 | % | 17,822 | 12.2 | % | 30,325 | 21.4 | % | |||||||||||||||||
| Other income (expenses) | |||||||||||||||||||||||||||||
| Interest expense | (3,999) | (5.5) | % | (3,677) | (5.1) | % | (8,215) | (5.6) | % | (7,364) | (5.2) | % | |||||||||||||||||
| Interest income | 96 | 0.1 | % | 90 | 0.1 | % | 190 | 0.1 | % | 181 | 0.1 | % | |||||||||||||||||
| Income before income taxes | 754 | 1.0 | % | 9,840 | 13.8 | % | 9,797 | 6.7 | % | 23,142 | 16.4 | % | |||||||||||||||||
| Income tax expense | 5 | — | % | 2,147 | 3.0 | % | 1,804 | 1.2 | % | 5,178 | 3.7 | % | |||||||||||||||||
| Net income | 749 | 1.0 | % | 7,693 | 10.8 | % | 7,993 | 5.5 | % | 17,964 | 12.7 | % | |||||||||||||||||
| Net loss attributable to noncontrolling interests | 25 | — | % | 39 | 0.1 | % | 7 | — | % | 6 | — | % | |||||||||||||||||
| Net income attributable to RCIHH common shareholders | $ | 774 | 1.1 | % | $ | 7,732 | 10.8 | % | $ | 8,000 | 5.5 | % | $ | 17,970 | 12.7 | % | |||||||||||||
| Earnings per share | |||||||||||||||||||||||||||||
| Basic and diluted | $ | 0.08 | $ | 0.83 | $ | 0.85 | $ | 1.94 | |||||||||||||||||||||
| Weighted average shares used in computing earnings per share | |||||||||||||||||||||||||||||
| Basic and diluted | 9,350,292 | 9,265,781 | 9,358,768 | 9,247,824 | |||||||||||||||||||||||||
| RCI HOSPITALITY HOLDINGS, INC. | |||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||||||||||||||||
| SEGMENT INFORMATION | |||||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||
| For the Three Months Ended | For the Six Months Ended | ||||||||||||||||||||||||||||
| March 31, 2024 | March 31, 2023 | March 31, 2024 | March 31, 2023 | ||||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||
| Nightclubs | $ | 59,372 | $ | 57,031 | $ | 120,405 | $ | 113,356 | |||||||||||||||||||||
| Bombshells | 12,771 | 14,315 | 25,502 | 27,746 | |||||||||||||||||||||||||
| Other | 140 | 171 | 283 | 383 | |||||||||||||||||||||||||
| $ | 72,283 | $ | 71,517 | $ | 146,190 | $ | 141,485 | ||||||||||||||||||||||
| Income (loss) from operations | |||||||||||||||||||||||||||||
| Nightclubs | $ | 11,021 | $ | 17,995 | $ | 31,390 | $ | 40,735 | |||||||||||||||||||||
| Bombshells | 699 | 1,775 | 785 | 3,622 | |||||||||||||||||||||||||
| Other | (277) | (168) | (473) | (353) | |||||||||||||||||||||||||
| Corporate | (6,786) | (6,175) | (13,880) | (13,679) | |||||||||||||||||||||||||
| $ | 4,657 | $ | 13,427 | $ | 17,822 | $ | 30,325 | ||||||||||||||||||||||
| RCI HOSPITALITY HOLDINGS, INC. | |||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||
| For the Three Months Ended | For the Six Months Ended | ||||||||||||||||||||||||||||
| March 31, 2024 | March 31, 2023 | March 31, 2024 | March 31, 2023 | ||||||||||||||||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||||||||||||||||||||
| Net income | $ | 749 | $ | 7,693 | $ | 7,993 | $ | 17,964 | |||||||||||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||||||||||||
| Depreciation and amortization | 3,884 | 3,760 | 7,737 | 7,067 | |||||||||||||||||||||||||
| Impairment of assets | 8,033 | 662 | 8,033 | 662 | |||||||||||||||||||||||||
| Deferred income tax benefit | (1,911) | — | (1,911) | — | |||||||||||||||||||||||||
| Loss (gain) on sale of businesses and assets | 40 | (3) | 37 | (689) | |||||||||||||||||||||||||
| Amortization and writeoff of debt discount and issuance costs | 149 | 147 | 312 | 291 | |||||||||||||||||||||||||
| Doubtful accounts expense on notes receivable | — | — | 22 | — | |||||||||||||||||||||||||
| Gain on insurance | — | (27) | — | (91) | |||||||||||||||||||||||||
| Noncash lease expense | 773 | 744 | 1,535 | 1,463 | |||||||||||||||||||||||||
| Stock-based compensation | 471 | 706 | 941 | 1,647 | |||||||||||||||||||||||||
| Changes in operating assets and liabilities, net of business acquisitions: | |||||||||||||||||||||||||||||
| Accounts receivable | (162) | (739) | 1,067 | 708 | |||||||||||||||||||||||||
| Inventories | 76 | 173 | (142) | 79 | |||||||||||||||||||||||||
| Prepaid expenses, other current, and other assets | 2,609 | 1,503 | (6,420) | (5,705) | |||||||||||||||||||||||||
| Accounts payable, accrued, and other liabilities | (3,875) | 2,170 | 5,265 | 8,288 | |||||||||||||||||||||||||
| Net cash provided by operating activities | 10,836 | 16,789 | 24,469 | 31,684 | |||||||||||||||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||||||||||||||||
| Proceeds from sale of businesses and assets | — | 26 | — | 2,810 | |||||||||||||||||||||||||
| Proceeds from insurance | — | 27 | — | 91 | |||||||||||||||||||||||||
| Proceeds from notes receivable | 61 | 58 | 116 | 113 | |||||||||||||||||||||||||
| Payments for property and equipment and intangible assets | (7,667) | (9,537) | (12,802) | (22,090) | |||||||||||||||||||||||||
| Acquisition of businesses, net of cash acquired | — | (25,000) | — | (29,000) | |||||||||||||||||||||||||
| Net cash used in investing activities | (7,606) | (34,426) | (12,686) | (48,076) | |||||||||||||||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||||||||||||||||||
| Proceeds from debt obligations | 1,956 | 10,095 | 2,657 | 11,595 | |||||||||||||||||||||||||
| Payments on debt obligations | (4,278) | (3,120) | (10,630) | (6,481) | |||||||||||||||||||||||||
| Purchase of treasury stock | (1,530) | — | (3,602) | (98) | |||||||||||||||||||||||||
| Payment of dividends | (560) | (553) | (1,122) | (1,015) | |||||||||||||||||||||||||
| Payment of loan origination costs | — | (109) | (136) | (205) | |||||||||||||||||||||||||
| Share in return of investment by noncontrolling partner | — | — | — | (600) | |||||||||||||||||||||||||
| Net cash provided by (used in) financing activities | (4,412) | 6,313 | (12,833) | 3,196 | |||||||||||||||||||||||||
| NET DECREASE IN CASH AND CASH EQUIVALENTS | (1,182) | (11,324) | (1,050) | (13,196) | |||||||||||||||||||||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 21,155 | 34,108 | 21,023 | 35,980 | |||||||||||||||||||||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 19,973 | $ | 22,784 | $ | 19,973 | $ | 22,784 | |||||||||||||||||||||
| RCI HOSPITALITY HOLDINGS, INC. | |||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | |||||||||||||||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||
| March 31, 2024 | September 30, 2023 | March 31, 2023 | |||||||||||||||||||||||||||
| ASSETS | |||||||||||||||||||||||||||||
| Current assets | |||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 19,973 | $ | 21,023 | $ | 22,784 | |||||||||||||||||||||||
| Accounts receivable, net | 8,779 | 9,846 | 6,755 | ||||||||||||||||||||||||||
| Current portion of notes receivable | 265 | 249 | 239 | ||||||||||||||||||||||||||
| Inventories | 4,554 | 4,412 | 4,571 | ||||||||||||||||||||||||||
| Prepaid expenses and other current assets | 8,387 | 1,943 | 6,870 | ||||||||||||||||||||||||||
| Assets held for sale | 74 | — | — | ||||||||||||||||||||||||||
| Total current assets | 42,032 | 37,473 | 41,219 | ||||||||||||||||||||||||||
| Property and equipment, net | 288,224 | 282,705 | 295,861 | ||||||||||||||||||||||||||
| Operating lease right-of-use assets, net | 33,396 | 34,931 | 37,244 | ||||||||||||||||||||||||||
| Notes receivable, net of current portion | 4,289 | 4,443 | 4,569 | ||||||||||||||||||||||||||
| Goodwill | 67,862 | 70,772 | 84,051 | ||||||||||||||||||||||||||
| Intangibles, net | 172,728 | 179,145 | 156,331 | ||||||||||||||||||||||||||
| Other assets | 1,362 | 1,415 | 1,856 | ||||||||||||||||||||||||||
| Total assets | $ | 609,893 | $ | 610,884 | $ | 621,131 | |||||||||||||||||||||||
| LIABILITIES AND EQUITY | |||||||||||||||||||||||||||||
| Current liabilities | |||||||||||||||||||||||||||||
| Accounts payable | $ | 5,632 | $ | 6,111 | $ | 7,743 | |||||||||||||||||||||||
| Accrued liabilities | 22,597 | 16,051 | 20,958 | ||||||||||||||||||||||||||
| Current portion of debt obligations, net | 25,072 | 22,843 | 21,016 | ||||||||||||||||||||||||||
| Current portion of operating lease liabilities | 3,098 | 2,977 | 2,951 | ||||||||||||||||||||||||||
| Total current liabilities | 56,399 | 47,982 | 52,668 | ||||||||||||||||||||||||||
| Deferred tax liability, net | 27,232 | 29,143 | 30,936 | ||||||||||||||||||||||||||
| Debt, net of current portion and debt discount and issuance costs | 206,853 | 216,908 | 224,751 | ||||||||||||||||||||||||||
| Operating lease liabilities, net of current portion | 33,593 | 35,175 | 36,429 | ||||||||||||||||||||||||||
| Other long-term liabilities | 317 | 352 | 383 | ||||||||||||||||||||||||||
| Total liabilities | 324,394 | 329,560 | 345,167 | ||||||||||||||||||||||||||
| Commitments and contingencies | |||||||||||||||||||||||||||||
| Equity | |||||||||||||||||||||||||||||
| Preferred stock | — | — | — | ||||||||||||||||||||||||||
| Common stock | 93 | 94 | 94 | ||||||||||||||||||||||||||
| Additional paid-in capital | 77,742 | 80,437 | 85,082 | ||||||||||||||||||||||||||
| Retained earnings | 207,928 | 201,050 | 190,905 | ||||||||||||||||||||||||||
| Total RCIHH stockholders' equity | 285,763 | 281,581 | 276,081 | ||||||||||||||||||||||||||
| Noncontrolling interests | (264) | (257) | (117) | ||||||||||||||||||||||||||
| Total equity | 285,499 | 281,324 | 275,964 | ||||||||||||||||||||||||||
| Total liabilities and equity | $ | 609,893 | $ | 610,884 | $ | 621,131 | |||||||||||||||||||||||
| RCI HOSPITALITY HOLDINGS, INC. | |||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||||||||||||||||
| NON-GAAP FINANCIAL MEASURES | |||||||||||||||||||||||||||||
| (in thousands, except per share and percentage data) | |||||||||||||||||||||||||||||
| For the Three Months Ended | For the Six Months Ended | ||||||||||||||||||||||||||||
| March 31, 2024 | March 31, 2023 | March 31, 2024 | March 31, 2023 | ||||||||||||||||||||||||||
| Reconciliation of GAAP net income to Adjusted EBITDA | |||||||||||||||||||||||||||||
| Net income attributable to RCIHH common stockholders | $ | 774 | $ | 7,732 | $ | 8,000 | $ | 17,970 | |||||||||||||||||||||
| Income tax expense | 5 | 2,147 | 1,804 | 5,178 | |||||||||||||||||||||||||
| Interest expense, net | 3,903 | 3,587 | 8,025 | 7,183 | |||||||||||||||||||||||||
| Depreciation and amortization | 3,884 | 3,760 | 7,737 | 7,067 | |||||||||||||||||||||||||
| Impairment of assets | 8,033 | 662 | 8,033 | 662 | |||||||||||||||||||||||||
| Settlement of lawsuits | 167 | 3,120 | 167 | 3,120 | |||||||||||||||||||||||||
| Loss (gain) on sale of businesses and assets | (5) | 3 | (8) | (587) | |||||||||||||||||||||||||
| Gain on insurance | — | (27) | — | (91) | |||||||||||||||||||||||||
| Stock-based compensation | 471 | 706 | 941 | 1,647 | |||||||||||||||||||||||||
| Adjusted EBITDA | $ | 17,232 | $ | 21,690 | $ | 34,699 | $ | 42,149 | |||||||||||||||||||||
| Reconciliation of GAAP net income to non-GAAP net income | |||||||||||||||||||||||||||||
| Net income attributable to RCIHH common stockholders | $ | 774 | $ | 7,732 | $ | 8,000 | $ | 17,970 | |||||||||||||||||||||
| Amortization of intangibles | 640 | 1,109 | 1,299 | 1,804 | |||||||||||||||||||||||||
| Impairment of assets | 8,033 | 662 | 8,033 | 662 | |||||||||||||||||||||||||
| Settlement of lawsuits | 167 | 3,120 | 167 | 3,120 | |||||||||||||||||||||||||
| Stock-based compensation | 471 | 706 | 941 | 1,647 | |||||||||||||||||||||||||
| Loss (gain) on sale of businesses and assets | (5) | 3 | (8) | (587) | |||||||||||||||||||||||||
| Gain on insurance | — | (27) | — | (91) | |||||||||||||||||||||||||
| Net income tax effect | (1,701) | (1,246) | (1,921) | (1,446) | |||||||||||||||||||||||||
| Non-GAAP net income | $ | 8,379 | $ | 12,059 | $ | 16,511 | $ | 23,079 | |||||||||||||||||||||
| Reconciliation of GAAP diluted earnings per share to non-GAAP diluted earnings per share | |||||||||||||||||||||||||||||
| Diluted shares | 9,350,292 | 9,265,781 | 9,358,768 | 9,247,824 | |||||||||||||||||||||||||
| GAAP diluted earnings per share | $ | 0.08 | $ | 0.83 | $ | 0.85 | $ | 1.94 | |||||||||||||||||||||
| Amortization of intangibles | 0.07 | 0.12 | 0.14 | 0.20 | |||||||||||||||||||||||||
| Impairment of assets | 0.86 | 0.07 | 0.86 | 0.07 | |||||||||||||||||||||||||
| Settlement of lawsuits | 0.02 | 0.34 | 0.02 | 0.34 | |||||||||||||||||||||||||
| Stock-based compensation | 0.05 | 0.08 | 0.10 | 0.18 | |||||||||||||||||||||||||
| Loss (gain) on sale of businesses and assets | 0.00 | 0.00 | 0.00 | (0.06) | |||||||||||||||||||||||||
| Gain on insurance | 0.00 | 0.00 | 0.00 | (0.01) | |||||||||||||||||||||||||
| Net income tax effect | (0.18) | (0.13) | (0.21) | (0.16) | |||||||||||||||||||||||||
| Non-GAAP diluted earnings per share | $ | 0.90 | $ | 1.30 | $ | 1.76 | $ | 2.50 | |||||||||||||||||||||
| Reconciliation of GAAP operating income to non-GAAP operating income | |||||||||||||||||||||||||||||
| Income from operations | $ | 4,657 | $ | 13,427 | $ | 17,822 | $ | 30,325 | |||||||||||||||||||||
| Amortization of intangibles | 640 | 1,109 | 1,299 | 1,804 | |||||||||||||||||||||||||
| Impairment of assets | 8,033 | 662 | 8,033 | 662 | |||||||||||||||||||||||||
| Settlement of lawsuits | 167 | 3,120 | 167 | 3,120 | |||||||||||||||||||||||||
| Loss (gain) on sale of businesses and assets | (5) | 3 | (8) | (587) | |||||||||||||||||||||||||
| Gain on insurance | — | (27) | — | (91) | |||||||||||||||||||||||||
| Stock-based compensation | 471 | 706 | 941 | 1,647 | |||||||||||||||||||||||||
| Non-GAAP operating income | $ | 13,963 | $ | 19,000 | $ | 28,254 | $ | 36,880 | |||||||||||||||||||||
| Reconciliation of GAAP operating margin to non-GAAP operating margin | |||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||||||||||||
| Income from operations | 6.4 | % | 18.8 | % | 12.2 | % | 21.4 | % | |||||||||||||||||||||
| Amortization of intangibles | 0.9 | % | 1.6 | % | 0.9 | % | 1.3 | % | |||||||||||||||||||||
| Impairment of assets | 11.1 | % | 0.9 | % | 5.5 | % | 0.5 | % | |||||||||||||||||||||
| Settlement of lawsuits | 0.2 | % | 4.4 | % | 0.1 | % | 2.2 | % | |||||||||||||||||||||
| Loss (gain) on sale of businesses and assets | 0.0 | % | 0.0 | % | 0.0 | % | (0.4) | % | |||||||||||||||||||||
| Gain on insurance | 0.0 | % | 0.0 | % | 0.0 | % | (0.1) | % | |||||||||||||||||||||
| Stock-based compensation | 0.7 | % | 1.0 | % | 0.6 | % | 1.2 | % | |||||||||||||||||||||
| Non-GAAP operating margin | 19.3 | % | 26.6 | % | 19.3 | % | 26.1 | % | |||||||||||||||||||||
| Reconciliation of net cash provided by operating activities to free cash flow | |||||||||||||||||||||||||||||
| Net cash provided by operating activities | $ | 10,836 | $ | 16,789 | $ | 24,469 | $ | 31,684 | |||||||||||||||||||||
| Less: Maintenance capital expenditures | 2,011 | 2,021 | 2,994 | 3,885 | |||||||||||||||||||||||||
| Free cash flow | $ | 8,825 | $ | 14,768 | $ | 21,475 | $ | 27,799 | |||||||||||||||||||||
| RCI HOSPITALITY HOLDINGS, INC. | |||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| NON-GAAP SEGMENT INFORMATION | |||||||||||||||||||||||||||||
| ( in thousands) | |||||||||||||||||||||||||||||
| For the Three Months Ended March 31, 2023 | |||||||||||||||||||||||||||||
| Bombshells | Other | Corporate | Total | Nightclubs | Bombshells | Other | Corporate | Total | |||||||||||||||||||||
| Income (loss) from operations | 11,021 | $ | 699 | $ | (277) | $ | (6,786) | $ | 4,657 | $ | 17,995 | $ | 1,775 | $ | (168) | $ | (6,175) | $ | 13,427 | ||||||||||
| Amortization of intangibles | 47 | — | 4 | 640 | 628 | 417 | 60 | 4 | 1,109 | ||||||||||||||||||||
| Impairment of assets | — | — | — | 8,033 | 662 | — | — | — | 662 | ||||||||||||||||||||
| Settlement of lawsuits | — | — | — | 167 | 3,117 | 3 | — | — | 3,120 | ||||||||||||||||||||
| Stock-based compensation | — | — | 471 | 471 | — | — | — | 706 | 706 | ||||||||||||||||||||
| Loss (gain) on sale of businesses and assets | 4 | — | (16) | (5) | (12) | 16 | — | (1) | 3 | ||||||||||||||||||||
| Gain on insurance | — | — | — | — | — | — | — | (27) | (27) | ||||||||||||||||||||
| Non-GAAP operating income (loss) | 19,817 | $ | 750 | $ | (277) | $ | (6,327) | $ | 13,963 | $ | 22,390 | $ | 2,211 | $ | (108) | $ | (5,493) | $ | 19,000 | ||||||||||
| GAAP operating margin | % | 5.5 | % | (197.9) | % | (9.4) | % | 6.4 | % | 31.6 | % | 12.4 | % | (98.2) | % | (8.6) | % | 18.8 | % | ||||||||||
| Non-GAAP operating margin | % | 5.9 | % | (197.9) | % | (8.8) | % | 19.3 | % | 39.3 | % | 15.4 | % | (63.2) | % | (7.7) | % | 26.6 | % | ||||||||||
| For the Six Months Ended March 31, 2023 | |||||||||||||||||||||||||||||
| Bombshells | Other | Corporate | Total | Nightclubs | Bombshells | Other | Corporate | Total | |||||||||||||||||||||
| Income (loss) from operations | 31,390 | $ | 785 | $ | (473) | $ | (13,880) | $ | 17,822 | $ | 40,735 | $ | 3,622 | $ | (353) | $ | (13,679) | $ | 30,325 | ||||||||||
| Amortization of intangibles | 110 | — | 9 | 1,299 | 1,256 | 419 | 121 | 8 | 1,804 | ||||||||||||||||||||
| Impairment of assets | — | — | — | 8,033 | 662 | — | — | — | 662 | ||||||||||||||||||||
| Settlement of lawsuits | — | — | — | 167 | 3,117 | 3 | — | — | 3,120 | ||||||||||||||||||||
| Stock-based compensation | — | — | 941 | 941 | — | — | — | 1,647 | 1,647 | ||||||||||||||||||||
| Loss (gain) on sale of businesses and assets | 4 | — | (18) | (8) | (581) | 16 | — | (22) | (587) | ||||||||||||||||||||
| Gain on insurance | — | — | — | — | (48) | — | — | (43) | (91) | ||||||||||||||||||||
| Non-GAAP operating income (loss) | 40,776 | $ | 899 | $ | (473) | $ | (12,948) | $ | 28,254 | $ | 45,141 | $ | 4,060 | $ | (232) | $ | (12,089) | $ | 36,880 | ||||||||||
| GAAP operating margin | % | 3.1 | % | (167.1) | % | (9.5) | % | 12.2 | % | 35.9 | % | 13.1 | % | (92.2) | % | (9.7) | % | 21.4 | % | ||||||||||
| Non-GAAP operating margin | % | 3.5 | % | (167.1) | % | (8.9) | % | 19.3 | % | 39.8 | % | 14.6 | % | (60.6) | % | (8.5) | % | 26.1 | % |
All values are in US Dollars.
10